The pound initially opened last week’s session on stable footing as GBP investors welcomed Scotland’s lifting of its remaining coronavirus restrictions.
Meanwhile, the pound is mostly rangebound so far this morning, with GBP/EUR flat at €1.1662 and GBP/USD muted at $1.3624. GBP/NZD is subdued at NZ$1.9967, while GBP/CAD and GBP/AUD climb to CA$1.7558 and AU$1.9120 respectively.
Coming up, will a disappointing UK retail sales reading help to propel GBP exchange rates lower again today?
What’s been happening?The US dollar maintained its upward trajectory yesterday, with investors continuing to favour the safe-haven currency amidst a gloomy market mood.
The souring market sentiment came as a result of renewed coronavirus fears, following the news that vaccines are less effective against the Delta variant and that reaching herd immunity may be less achievable than previously hoped.
This upside in USD exchange rates was then further reinforced by the latest US initial jobless claims as new claims fell to a new post-pandemic low for the week ending 14 August.
The continued strength of the US dollar limited demand for the euro on Thursday due to the strong negative correlation between the world’s most traded currency pairing.
The pound, meanwhile, remained on the defensive yesterday, with GBP investors seeming spooked by a worrying rise in new coronavirus cases in the UK.
Sterling also continued to be pressured by Wednesday's consumer price index, as a sharper-than-expected slowing of domestic inflation raises doubts that the Bank of England (BoE) will be able to start tightening its monetary policy in the near-term.
What’s coming up?Kicking off today’s session was the publication of the UK’s latest retail sales figures.
July’s release revealed that sales growth unexpectedly contracted, slumping 2.5% against forecasts for a modest 0.4% expansion.
This was the worst slump in sales growth since January when the third lockdown was introduced, and is likely to leave the pound to limp over the finishing line this week.
On the other side of the Channel, with notable EUR data releases still thin on the ground the euro could struggle to find any momentum today.
Finally, its likely we could see the US dollar continue to march higher into the weekend, as the bearish market bias looks to remain firmly entrenched.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)